Tokyo, Osaka stock markets to merge as one

An announcement on Thursday from the Tokyo Stock Exchange (TSE) said that pending an approval from the Fair Trade Commission, it will takeover and merge with the smaller Osaka Securities Exchange (OSE). The deal is expected to finished by August, with the two stock markets hoping to launch their joint operations sometime in early 2013. The new tentative name for their merger is “Japan Exchange Group,” and, if approved, will close much of the gap between Japan’s stock market and Nasdaq, ranked second in the world.

This merger of Japan’s two largest stock markets comes while the country is heavily struggling with the strength of the yen against other worldwide currencies, making it difficult for export industries to make profits overseas. The country’s economy is also hurting in a bad way, with a shrinking population, the world’s largest public debt, and the parliament’s Lower House just approving a bill that will increase Japan’s sales tax to 10% by 2015. Japan’s benchmark Nikkei index reached the highest it’s ever been at just under 39,000 in December of 1989. On Wednesday of this week it closed with an index of 9,104.

The goal of combining the TSE and OSE is bring together Tokyo’s trading center for large corporations like Sony and Toyota, with Osaka’s strength in drivatives-trading. The result of this will be large cost savings and a boost to Japan’s market. Japan also has several other smaller regional stock markets in cities like Nagoya and Sapporo, but prior to this merger, the TSE alone was the world’s third largest.

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